CFC s Financial Webinar Series. How to Submit Your Question. The Rise of Prepaid Metering. Financial Webinar Series. Financial Webinar Series

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1 CFC s The Rise of Prepaid Metering How to Submit Your Question Step 1: Type in your question here. Step 2: Click on the Send button.

2 To Save Today s Presentation: Click in Links Box to open handouts. Click here to print or save handouts. CFC s The Rise of Prepaid Metering

3 As a result of this session you will be able to: Describe a prepaid metering system. List the benefits prepaid metering will bring to cooperatives and consumers. List the key questions to ask when considering adding a prepaid metering system to the cooperative. Dal Langston Central EMC Jonathan White Peninsula Light John Penry CFC Which of the following is notthe name of an active prepaid card somewhere in the world? A. Octopus B. Proton C. UPside D. DoughRoller E. Green Dot Polling Question

4 Today s takeaway: The fine print in any contract is there for a reason! Dal Langston Central EMC CEMC Pre-paid Metering Program

Pay deposit in full Pay in 3 installments over 4 week period Enroll in Prepay program Started with pilot program of 50 members

5 Program began in 2008, as an alternative to paying a deposit CEMC requires a good credit score or a $500 deposit on all new connects Their options? Pay deposit in full Pay in 3 installments over 4 week period Enroll in Prepay program Started with pilot program of 50 members Currently have 575 enrolled in prepay Customer Hookup $30 service establishment fee $65 Minimum credit balance CEMC technician installs TS2 meter and Collar (remote service switch) Arrears can be paid off over time at 40% through debt recovery option

6 Disconnect Provisions System is programmable to allow for low balance threshold set by the member sending phone call or per member choice Once below -$5 they receive a phone call alerting them to pending disconnect in 24 hours Once disconnected must establish $20 credit before reconnect No reconnect fees Automatically connects and disconnects Rate Comparison Residential Non Prepay rate $20 Facilities Charge June-October < 1000 kwh = > 1000 kwh = November-May < 1000 kwh = >1000 kwh = 8.96 Residential Prepay rate Facilities Charge June-October < 1000 kwh = > 1000 kwh =10.08 November-May < 1000 kwh =10.60 > 1000 kwh =8.96 Consumer Behavior Customers frequently buy small amounts weekly Purchases peak on Fridays, which are typically paydays Some Customers prefer the Prepay to paying Deposit amount at one time Makes customers more aware of usage?

Understand what you are trying to achieve through a prepay system Jonathan White Peninsula Light Who Are We?

7 Lessons Learned Prepaid programs do not fit into the traditional billing cycle Purchases are made frequently at the convenience of the customer System is not financially feasible without RSS devices Understand what you are trying to achieve through a prepay system Jonathan White Peninsula Light Who Are We? Founded in 1925 Mutual Coop (Member Owned) Second Largest Coop in Washington 110 Sq. miles 30,000 Electric 2,800 Water 21

Member Demographics Bedroom Community to Retirement Community More retired households (45%) than working

grads Number of years served has increased less transitory population Prepay RFP RFP March 2011 3 vendors 2

cost/meter Debt liability & recovery Implementation Team Member Services Team coordinator Business case

8 Member Demographics Bedroom Community to Retirement Community More retired households (45%) than working households 64% are over 55 40% over 65 64% live in 1-2 member households 84% attended college 56% college grads Number of years served has increased less transitory population Prepay RFP RFP March vendors 2 responded Developed Prepay Pro Forma 1% annual growth rate 300 meters Deploy new AMI meter Monthly cost/meter Debt liability & recovery Implementation Team Member Services Team coordinator Business case Information Services Postpaid & prepay Financial Services Revenue reporting Metering New meter deployment Multi Department Effort

Areas of Implementation Challenges 1. Interface legacy CIS & prepay CIS Most time consuming 2. AR revenue/credit posting Creating new GL and financial reporting 3.

9 Areas of Implementation Challenges 1. Interface legacy CIS & prepay CIS Most time consuming 2. AR revenue/credit posting Creating new GL and financial reporting 3. Posting online payments Different file protocols between vendors 4. Keeping vendors on task Sometimes required intervention at a senior level Can you make a business case? One size doesn t fit all Talk with other co-ops Do you have the internal resources? Conclusion Discuss your intentions with your other vendors Are they familiar with prepay? Have they worked with the prepay vendor that you re considering? Get buy in from the other departments!

John Penry CFC Salt River Project SRP Prepaid Metering Program Program began in 1993, in accordance with Arizona law to aid low income consumers Started with pilot program of 100 customers In-home

10 John Penry CFC Salt River Project SRP Prepaid Metering Program Program began in 1993, in accordance with Arizona law to aid low income consumers Started with pilot program of 100 customers In-home display (UDT) hard-wired to meter Used power line communication (PLC) in 1999 Now uses dual frequency Began using payment kiosks in late 1990s (now over 100 locations) Program has more than 120,000 prepay customers

11 Customer Hookup $99 deposit for UDT ($87.50 refundable) $28 service establishment fee Customer gets two Smart Cards, one pre-loaded with $30 credit SRP technician swaps out new meter, customer connects UDT and marries with meter Arrears, deposits and fees are paid off over time at 40% of what the customer adds to the card Customer usage information is transferred to utility when credit is added to card Arrears Example Disconnect Provisions System is programmable to allow for credit during certain hours and emergency periods Friendly Credit Emergency Credit Will disconnect if balance is zero, but no reconnect fee (as high as $100) Credit is paid off like arrears at 40% M-Power is not for the poor with a medical discount

12 E-23 (basic residential price plan) M-Power Rate Comparison < 700 kwh kwh >2000kWh Nov thru Apr May thru Jun Jul thru Aug Sep thru Oct Monthly Meter Charge $15 $15 Deposit $285 $99 Consumer Behavior Customers frequently buy small amounts weekly Purchases peak on Fridays, which are typically paydays Customers like having the kiosks where they shop for other items Customers prefer the convenience and budgeting ability Reduced consumption by 12% Conservation Effect Prepaid metering is appealing to customers who choose to use less energy Many like the cost and usage visibility for educating family members Customers can make immediate adjustments to usage 12% reduction has been constant across groups and time periods

13 Lessons Learned Prepaid programs do not fit into the traditional billing cycle Purchases are made frequently at the convenience of the customer Work closely with consumer advocacy groups Work with a system that is scalable Understand your cost drivers Now let s turn it over to our audience! How to Submit Your Question Step 1: Type in your question here. Step 2: Click on the Send button.

Please take a minute to complete the NRECA survey. Your responses will help us improve the broadcast quality of these Web conferences! Events & Training Tab WWW.NRUCFC.

14 Please take a minute to complete the NRECA survey. Your responses will help us improve the broadcast quality of these Web conferences! Events & Training Tab Look for all of our program recordings right here! For more information about the Salt River Project: pdfx/spp/epri_mpower.pdf

15 Mark Your Calendar For Our Next Event: May 9, 1 p.m. Eastern Daylight Time The Topic: For Directors, Our Next Event is: April 19, 3 p.m. Eastern Daylight Time Considering Equity Management: The Directors Cut This program Uncollectablesand the Rise in Prepaid Metering is a copyrighted presentation of CFC. No portion of this program may be reproduced, used or distributed without CFC s written consent.

CFC s Financial Webinar Series Capital Planning: What do I do now? How to Submit Your Question. Financial Webinar Series. Financial Webinar Series

CFC s Financial Webinar Series Capital Planning: What do I do now? How to Submit Your Question. Financial Webinar Series. Financial Webinar Series CFC s Capital Planning: What do I do now? How to Submit Your Question Step 1: Type in your question here. Step 2: Click on the Send button. CFC s Capital Planning: What do I do now? Today s speakers Steve